[UPDATED] MTGox and dark pool - page 3.

Stephen Gornick

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Quote from: jed on April 08, 2011, 11:24:43 AM

For example, if a small investor places a bid for 50BTC above all the others there will probably be 0 reaction.

That's not what I've seen. When I want to do a trade but only if the order is filled at about the current best offer, I'll jump in front of the current best offer by a tiny amount. Then often a bot or another trader will often jump in front of mine.

When Mt. Gox supported websockets, this tool http://www.thenewsh.com/~newsham/x/mtgox/ showed the bots in action. It was quite entertaining watching that display when another bot or another trader would walk the first bot higher or lower and then snag an order at a better price.

As far as offering a dark pool, I'm in favor. There are numerous tools used in finance. I don't know why we would want to hobble Bitcoin by discouraging the use of one of the more valuable tools.

jed

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Jed McCaleb

imanikin: I get your point that dark pools seem like an unfair advantage to bigger investors. But I would argue that the market has a very different reaction to when a big investor places an order than to when a small one does. For example, if a small investor places a bid for 50BTC above all the others there will probably be 0 reaction. But if a big investor places a bid for 5000BTC above all the others the market definitely reacts. Specifically tons of people jump in front of his order. Probably his order is never filled since the price will just move above it.

There is also the unfair fact that 1 big trader is more valuable to the market than 1 small one since a big trader provides more liquidity. So an exchange has more incentive to keep the big guys happy.

I'm actually a bit curious what would happen if the order book wasn't shown at all. I suppose it would make trading less interesting.

mndrix

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I voted "keep it as is". Because bots can simulate dark pools, removing dark pools doesn't really change the market any. It just creates a slight barrier to entry for dark pool use. (Although I suppose bots do surface the "tip of the iceberg", so the book might look healthier without official dark pool support).

imanikin

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Quote from: jed on April 08, 2011, 09:18:27 AM

imanikin: can you point to the threads explaining what you don't like about the DP?

I think a lot of the pros and cons, including mine, were covered in this thread:

https://bitcointalksearch.org/topic/distribution-of-wealth-3772

jed

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Jed McCaleb

imanikin: can you point to the threads explaining what you don't like about the DP?

The DP definitely reduces volatility. It is hard to buy a sell a lot of BTC otherwise.

The only other complaint I've heard about it is that it makes it hard for speculators to know how much they will move the market with an order. But the only reason to worry about this is if you want to do tricky things like dump a bunch of BTC to lower the price and then buy it back plus some. But I'm not sure this is such a bad thing.

I tend to think it is fine how it is but the limit should be raised so it is really just very large orders.

Psychoactive

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Quote from: da2ce7 on April 08, 2011, 05:05:20 AM

Quote from: fetokun on April 08, 2011, 04:56:14 AM

I like the idea of charging a fee

Either you have dark pools free and available to anyone, eg. don't limit to 1000BTC/$ +
Or don't have them at all.

Voted to remove it. But I understand bots are able to emulate the same behaviour as dark pools so... In all cases, I agree with da2ce7, if you keep it, it should be open to every trader, rather than limited to 1000btc+.

S3052

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Quote from: Grinder on April 08, 2011, 08:31:41 AM

Quote from: slush on April 08, 2011, 08:23:25 AM

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

Then there haven't been any DP trades the last 24 hours, so I suppose it wouldn't make very much difference if they were open.

No, you're not getting it yet.

All trades, no matter of dark pools only, dark pools + normal and normal only are visible. You can ask the exchange owner if they can provide you with an analysis how much % of the last 24 h trades were ingnited by dark orders.

S3052

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Quote from: Grinder on April 08, 2011, 07:27:52 AM

I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

You are wrong here.
The dark pool trades are all part of all the trades you see on bitcoincharts.com

hence, only the dark trade offers are invisible, while the resulting trades are treated in the same way as other orders. Net, dark pool do not mask any volume.

This is based on what I heard from the owners of MtGox. If this is confirmed, dark pools have only positives.

Grinder

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Quote from: slush on April 08, 2011, 08:23:25 AM

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

Then there haven't been any DP trades the last 24 hours, so I suppose it wouldn't make very much difference if they were open.

slush

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Quote from: Grinder on April 08, 2011, 07:27:52 AM

I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

DP does not affect volume; historical volume shows also DP trades. So that's not good reason for disabling DP.

Keefe

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Quote from: killerstorm on April 08, 2011, 07:52:38 AM

Quote from: Keefe on April 08, 2011, 07:33:23 AM

FWIW, I think you have bids and asks confused.

Current bids on the order book (Depth of Market) represent other buyers waiting for sellers, and asks represent sellers waiting for buyers. When you want to buy immediately, you clear/fill asks, driving up the best/lowest ask. When you want to sell immediately, you clear/fill bids, driving down the best/highest bid.

Yep, you're right. But it doesn't matter much if we're talking about currency exchange -- if one sells bitcoin you can as well say he is buying USD and vice-versa.

I apologize. I didn't catch that when you said buy, you were actually referring to selling BTC and buying USD. Given that at MtGox the term Buy refers to buying BTC, it might be best to follow that convention so as to not confuse someone possibly less experienced with currency trading.

killerstorm

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Quote from: Keefe on April 08, 2011, 07:33:23 AM

FWIW, I think you have bids and asks confused.

Current bids on the order book (Depth of Market) represent other buyers waiting for sellers, and asks represent sellers waiting for buyers. When you want to buy immediately, you clear/fill asks, driving up the best/lowest ask. When you want to sell immediately, you clear/fill bids, driving down the best/highest bid.

Yep, you're right. But it doesn't matter much if we're talking about currency exchange -- if one sells bitcoin you can as well say he is buying USD and vice-versa.

Jered Kenna (TradeHill)

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I think it hurts the appearance of legitimacy. I understand why they're there and why they should work and because of that I'm not 100% decided.
I also realize bots are basically going to be doing the same thing.
I'm curious how much trading is being done DP vs in the open? Is it a 50/50 split or really tilted one way?
I think we would all like to see more volume and I don't think DP really goes with the openness of bitcoin.

I'm voting no but to be honest I'm not 100% sure what is best.

Keefe

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Grinder

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I voted remove it, because I think a higher volume would make people take bitcoins more seriously.

ColdHardMetal

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As near as I can tell after having thought about this for awhile a dark pool will never hurt you pricewise. Assuming the dark pool is inside the visible spread you'll always get to buy at a lower price or sell at a higher price than you expected. The only real problem is the lack of visibility in terms of the depth of market as mentioned above.

With that thought in mind would it make sense to incorporate a "dark depth" number or something that tells you the depth of the market between the spread but doesn't tell you the prices? Or would that just make a dark pool useless?

S3052

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Quote from: slush on April 08, 2011, 04:48:24 AM

I voted for 'keep it as is'. I believe that most of dark pool haters don't really understand what DP is and they are simply scared by unknowns.

Writing custom bots for trading large amounts is ugly workaround, DP solve that nicely. I simply don't see the reason why to remove it.

Disclaimer: I didn't used DP yet, so I'm not following my own interests Wink

.

Edit: OK, I see one reason why DP is bad - market then looks thinner and people are affraid of trading because it looks like trade will be filled for worse price.

Agree 100%.

Stopping dark pool will in all likelyhood increase the spreads = making buying and selling bitcoins more expensive for most people.

imanikin

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Whenever possible, for reasons i've stated in numerous ways in other threads, i will avoid dealing on Mt Gox again, as long as the dark pool exists there...

killerstorm

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Quote from: MagicalTux on April 08, 2011, 04:27:49 AM

That was the original idea. However the result is not exactly what was expected... maybe? (hard to tell what would have happened without the dark pool)

Is there some statistics on volume of transactions in dark pool vs normal transactions?

grondilu

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After some hesitation, I voted "remove it".

Not that I think dark pools are a bad thing or that it should be forbidden. I just don't think it's necessary and I'd rather see as many orders as possible.

But I really think it's only up to you. MtGox is your business, not ours.

Topic: [UPDATED] MTGox and dark pool - page 3. (Read 13245 times)